Economics Seminar: Do Oil Windfalls Improve Living Standards? Evidence from Brazil

When?

Wednesday 6 April 2011, 16:00 to 17:00

Where?

LTF

Open to:

Public, Staff, Students

Speaker:

Dr Guy Michaels (London School of Economics)

Dr Guy Michaels (London School of Economics)

"Do Oil Windfalls Improve Living Standards? Evidence from Brazil"

Abstract

We use variation in oil output among Brazilian municipalities to investigate the effects of resource windfalls on government behavior. Oil-rich municipalities receive higher revenues (mostly from oil royalties) and report correspondingly higher spending on public goods and services. But survey data and administrative records indicate that this higher reported spending has led to little (if any) increase in social transfers, public good provision, infrastructure, and household income. To explain why some of the oil windfall has apparently gone missing, we show that large oil output increases instances of alleged illegal activities associated with mayors.